For an undisclosed sum, Umba– a US-based digital bank with a focus on emerging countries– purchased the majority of shares in Daraja, a Kenyan deposit-taking microfinance bank.
The acquisition of Umba’s 66.6 percent stake, according to the Central Bank of Kenya (CBK), is anticipated to hasten Daraja’s digitization.
This comes after Umba reported in April of this year that it had raised $15 million in pre-series financing, along with intentions to grow outside of Nigeria to Kenya, Ghana, and Egypt. Investors including Costanoa, Monzo co-founder Tom Blomfield, Lachy Groom, ACT Ventures, Lux Capital, Palm Drive Capital, Banana Capital, and Streamlined Ventures have contributed to Umba’s $17.5 million in funding to date.
Tiernan Kennedy and Barry O’Mahony launched the fintech company, which provides a variety of financial services including bill payment, free accounts, peer-to-peer transfers, interbank transfers, and loans with a 10% monthly interest rate.
“The investment by UMBA will strengthen Daraja MFB’s business model. In particular, it will support the digitization of Daraja MFB as it moves to providing ‘anytime anywhere’ services to its customers. This is aligned to CBK’s vision of a microfinance banking sector that works for, and with Kenya,” the CBK said in a statement.
According to the CBK, Daraja (which received its license in 2015 and mostly serves small and medium-sized businesses) has a market share of less than 1% of Kenya’s microfinance banking industry.
Daraja will give Umba a better position in the competitive finance market of the nation and the chance to provide more focused services. It will also provide a lifeline for microfinance in a market that has been severely disrupted by online lenders.
A few months before its agreement with Daraja, Branch International– another Silicon Valley-based fintech with operations throughout Africa– acquired the bulk of the stock in Century Microfinance Bank. Fintechs can now offer additional banking services that they would otherwise not be able to support; thanks to these acquisitions, which also allow them access to the current financial services customer.
In a previous interview, Umba announced that in addition to global expansion, it has plans to introduce debit cards, support savings accounts, and assist stock trading soon.
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